An Application of Data Envelopment Analysis: Determining Efficiency in the Market Share and Profitability Relationship.
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF ENGINEERING
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This thesis determines the role of efficiency in market shares positive relationship with profitability for U.S. manufacturing firms. Two types of efficiency measures are employed in this study. The first is an absolute measure of efficiency using a simple ratio of input to output. The second type is a relative measure of efficiency of output to input calculated by using a new mathematical programming technique called Data Envelopment Analysis. Statistical estimation with linear regression is used to estimate an additive model to test the market share role. Return on sales is used as the profitability measure. The efficiency measures that are compared to market share include the simple ratio of cost to sales and the relative measures of profit to employees and sales to cost. The data used for this study is a subset of the data used by Hagin 23 in a previous thesis. The data is an average of 1977-1979 Compustat data as well as the 1977 Census of Manufactures data. Market share was derived from the Compustats three year average of net sales divided by the Census value of shipments for the industry identified with the firms business activity. Keywords Economic analysis, Economic model. Theses.
- Economics and Cost Analysis